Fatima Shuwaikh attended the AIB 2018 Annual Meeting  in Minneapolis on June 25-28 2018. She presented the following paper: The impact of access to investor complementary assets on the entrepreneurial company’s innovation output: a comparison between corporate venture capital- and independent venture capital-backed companies.
Entrepreneurial companies are a vital source of innovation. Currently, companies are financed by a broad array of investors whose profiles vary significantly. Therefore, we assert that entrepreneurial companies can no longer be studied as a homogeneous group. Instead, to examine companies’ innovation outcomes, we focus on the inherent dichotomy in the profiles of independent venture capitalists (IVCs) and corporate venture capitalists (CVCs) . Our sample consists of 1547 U.S. biotechnology companies founded between 1998 and 2013 and financed by IVCs or CVCs. We analyze how corporate venture capital (CVC) differs from independent venture capital (IVC) in nurturing innovation in entrepreneurial companies. We find that CVC-backed companies display higher rates of innovation output, as measured by their patenting outcomes, than their IVC-backed counterparts. Moreover, the performance of CVC-backed companies is responsive to their ability to leverage the assets of corporate investors. We suggest a proper mechanism underscoring the role of CVC funding. Our baseline outcomes provide evidence that is compatible with three underlying mechanisms: The first mechanism is the absorptive capacity of entrepreneurial companies to absorb, realize and apply new technology, resources and information. The other two mechanisms are tie strength, which reflects the relatedness between the corporate investor and the company in the business description, and geographic proximity, which is the distance between them.